What is Tax Relief?
Tax relief is a tax deduction, tax credit, reduction in tax rate or forgiveness of a tax lien.
How Does Tax Relief Work?
For example, let's say John and his wife had a baby in 2011. When John filed his tax return for the year 2011, he qualified for a $1,000 child tax credit, which lowered his tax bill by $1,000. In other words, John and his wife get tax relief for having a baby.
There are hundreds of forms of tax relief, and often the term is used in political discussion and campaigns in reference to reductions in taxpayers' overall tax burden. Tax relief can be available to a variety of people and companies, though sometimes it is only available under certain circumstances. Many tax breaks are not available to taxpayers with certain incomes, for example.
Why Does Tax Relief Matter?
Tax relief lowers tax bills, which is why taxpayers and tax advisors spend considerable amounts of time determining which deductions and credits they qualify for each year. It is also influential in elections. Governments often implement tax relief programs to encourage or discourage certain behavior in certain industries or programs.
